Registered users can save articles to their personal articles list. Login here or sign up here

Dear Finance Minister Tito Mboweni

An open letter to you.

On Wednesday morning February 20 at 06:45, I was standing on the Gautrain Rosebank station platform in Johannesburg.

It was budget day, and I was on my way to Pretoria for the lock-up.

South Africa’s issues are well-known. Dire economic growth, fiscal slippage, Eskom’s massive debt burden, the ballooning government wage bill … the list goes on.

I wondered what you’d say. The election is less than three months away, unions are angry about Eskom’s unbundling and Moody’s is the only rating agency that still regards South Africa’s local currency debt as investment grade. Some say a downgrade is inevitable. At the same time there have been reports that you will leave your post after the election. That you are uninterested in what is happening at Treasury. How would these developments influence your speech? Would they?

I arrived in the Pretoria CBD shortly before 08:00. Our phones were taken away and we got copies of all the budget documents and your speech.

I started reading.

From plums to prickles

Unlike one of your predecessors, Trevor Manuel, who handed out plums to MPs during boom times, you likened the country’s dire economic situation to the Aloe ferox plant. It is resilient, you said. Sturdy and drought resistant, and that we had to take the bitter with the sweet.

Reading your speech, I wondered if it would change by 14:00. Your candid prepared comments were bound to step on toes.

“Isn’t it about time the country asks the question: do we still need these enterprises?” you said, referring to state-owned enterprises (SOEs). “If we do, can we manage them better? If we don’t need them, what should we do?” you asked.

When a journalist later pressed you to answer your own question during a press conference, you stressed that a conversation was necessary, but said that when business units don’t work in the private sector, they shut down. There is no emotional attachment. In government things work differently, but if you answered the question yourself there might be a strike tomorrow (today).

You said you liked using the railway system when you travel in Europe. You said that if you had your way money would go to railways and taxis, but that you were just one person.

In your prepared speech you said: “The National Government is not taking on Eskom’s debt. Eskom took on the debt. It must ultimately repay it.”

Fiscal support would be dependent on the appointment of an independent chief reorganisation officer (CRO) within SOEs.

In the press conference you likened the process to curatorship. You recalled your time as a board member at PPC, when banks took away your keys, as you put it. A CRO was appointed. I wondered if these comments wouldn’t be construed as too ‘pro-business’? But you seemed undeterred, also recalling your time at Discovery where CEO Adrian Gore decided on paperless board meetings, something you are now embracing as minister of finance.

Plum advice for SOEs

You had some frank comments for struggling SOEs wanting money: “You want money from us, we put you under curatorship. My advice to them: avoid the National Treasury.”

You proposed that a summit be held to debate the future of SOEs. It seems you feel that an emotional attachment to state-owned assets in a post-Soviet era is meaningless and that there is insufficient debate about the issue of disposing gas guzzler assets, as you put it. Yet even though government is seeking an equity partner for Eskom’s transmission unit, you echoed president Cyril Ramaphosa’s comments that privatisation is not on the cards.

Job creation is a sore point. So announcements around reducing the public sector wage bill could not have been easy. Early retirement is one thing, but limits on overtime and bonus payments and pay progression will be unpopular. Interestingly, you seem to think that we don’t have too many civil servants and need more police and nurses. The question is what the level of pay should be.

Not the type of comments that will warm the hearts of voters.

Damned difficult

And yet, the country’s dismal growth figures and fiscal slippage won’t be welcomed by Moody’s either. You acknowledged that Treasury had “very, very difficult” conversations with rating agencies, which left you feeling “damned if you do, damned if you don’t”.

When journalists asked you about public protector Busisiwe Mkhwebane’s finding that director-general Dondo Mogajane failed to disclose a criminal record on his application form – the result of a speeding fine – and that remedial action should be taken against him, you indicated that there was a collective view in National Treasury that her findings were wrong, and that you would take it on review.

“The incumbent [Mkwhebane] is a problem,” you said.

Despite all the bad news, you were in good spirits, and said Mogajane is a good Christian. It seems the Biblical references in your speech were the DG’s doing.

It appears you were offended by a report suggesting you were not interested in your job. You referred former Business Day editor Peter Bruce, who wrote a column about it, to your oath of office, where you promised to perform your functions to the best of your ability.

When a journalist asked if you were available to serve as finance minister after the election, you said you had a deal with deputy president David Mabuza that if he wins the election, you could discuss it.

“I’ll be around for a while,” you said. “Don’t worry about that.”

I hope you are, Minister Mboweni. Things don’t look great at all, and even if we believe the steps you outlined are the right ones, it is not a given that they will be implemented. I expect major pushback.

But the candid way in which you dealt with the issues in your press conference has given me a glimmer of hope. The next few months will be tough. Good luck.

Regards

Ingé Lamprecht

Get access to Moneyweb's financial intelligence and support quality journalism for only
R63/month or R630/year.
Sign up here, cancel at any time.

AUTHOR PROFILE

COMMENTS   33

To comment, you must be registered and logged in.

LOGIN HERE

Don't have an account?
Sign up for FREE

Ingé ….eloquent

Not sure if between the lines you were begging Tito to admit the dire sad prognosis ….that SA is terminally down the toilet

Dear Tito,

Flowery language aside. We’re not idiots, neither are investors.

> You’ve given ESKOM a R69 billion taxpayer BAILOUT(not a cash injection).
> You’ve given them a signal they are too big to fail.
> and FAIL they will continue (no matter how you dice/restructure ESKOM).

There have been and wont be any productivity increases, retrenchments, turnarounds because of continued bail outs and wrist slaps over the last 25 years. Also, you failed to explain the path ahead for our nations power shortages for the next 5,10,20 years.

Chinese proverb for Tito: Punish a dog by hitting it with a meat bun… Trying to punish someone by unintentionally rewarding their failure.

The country’s upcoming water crisis will no doubt make Eskom’s crisis fade from the limelight. Watch this space.

Alternatives could and have been found for electricity – gas, solar, generators, etc. However, there are NO alternatives for water – a scarce commodity in our country. Water shortages and pollution are a ticking TIME BOMB!

Looks like the plan is to keep Eskom on life support until the private sector can take over, by producing power and picking up the still functional power stations on the cheap.

Eskom will fail by itself, so that the ANC does not have to take responsibility.

The “grand plan”? Do nothing.

Who knows, in the end Cosatu may march in favour of higher tariffs, to keep Eskom going.

By the way, did anyone notice the blistering success of David Makhura’s unselfish bengagement with his boss to scrap e-tolls?

Dear Minister Mboweni

Everybody will have comments, good and bad. Everyone will have advice, good and bad. Some will praise and some will insult. No-one, neither individuals or government, will ever be able to satisfy everyone.

Zuma will be remembered for looting and destroying this beautiful country. What will you and our President be remembered for?

Tough times calls for tough decisions, the bitter with the sweet. Saying it is one thing, doing it is creating a legacy.

Scrap all labor laws close the department of labor and install a hire and fire policy. The troubles at Eskom will go away, as they will end up having the correct amount of willing and able staff who will actually be doing their work or end up getting fired. SOE’s and all government departments will have the same results. Thus no more bleeding, no more excessive and unnecessary government spending. The private sector will also boom. No-one will be afraid to create jobs. Currently nobody wants to create new jobs as it is a huge burden to get rid of a lazy non-contributing worker.

So how will you and our current government be remembered? As the ones who did the bitter things to get the sweet result or the ones that said the sweet things and left us with a bitter result? I will also be around for a while, waiting, watching.

It’s one of our repeated fundamental errors, we assume that anyone in government actually cares. By their actions we can clearly see that they don’t. Regardless of how bad things get for the people and the country they will not be personally affected. Forget their empty words, that’s all they have to sell.

Exactly. So ask yourself, why vote at all? What is the point. No person in politics will help us here. This country is doomed to thieves.

Not sure about the European rail services he seems to like – certainly Deutsche Bahn is not in great shape due to underinvestment in infrastructure – https://www.theguardian.com/world/2018/dec/20/trains-on-time-germans-deutsche-bahn-railway
SNCF in France has massive debt, union troubles and delays – https://www.thelocal.fr/20180720/french-rail-strike-cost-state-nearly-800-million
UK trains are too expensive relative to cars, the privatisation model they followed has had very mixed results at best and the trains don’t run on time.

The speech seemed pretty measured under the circumstances. Think it might have helped considerably if he had pulled something practical out of the bag regarding controlling SOE expenditure. For example, collaborating with Pravin to reach a point where they could have announced in an orderly way shutting down SAA’s air services at least. Maybe keeping only Technical, catering and lounge services.

I agree, that the French and German railways are not as good as they were 10-20 years ago, but they are still million times better than the local ones.

@NR. Agree, the German (or French) railways at times is perhaps not as punctual as they used to be a decade ago….even one German commented “Germany must have one of the worst railways in the world”. For sure….according to high German standards they became used to?? *lol*

Things must be seen in context:

Germans & other Europeans will easily complain about something that may seem trivial in 3rd world countries. Europeans have become accustomed to high standards of service, and a slight deviation from that, they cry out “disaster”. That’s why some of them cannot understand how we Saffas cope with all the service delivery issues, but we have grown accustomed to it, accepting it as normal. The Congolese train commuter will accept the fact that his train is an our late today, like most days, whereas a Japanese train driver will have a serious disciplinary if his train arrives 2 minutes behind schedule, and it will shamed on their daily newspaper.

Enjoyable article re global train punctuality:

https://www.bbc.com/news/world-asia-42024020

Same with politics: if you read online British, Canadian, US and other news & see comments their citizens have about their own Governments, it sounded like they live in one of the worst countries on the planet.

All they need, is to visit a 3rd world country on a holiday to get a reality check (*lol*), and then returning home stating they experienced a “great adventure” as no day ended up the same. In 1st world countries people mostly die of boredom as a result of societal certainty for the day of tomorrow that things will operate the same as it has been.

With SA, every new day can be described as “unprecedented” 😉 Like our JSE stock market since 2014. Saffas live in adventurous times…

You are misinformed sir; been taking the train from Northampton to London for a year now and the experience is fantastic. Does not even compare to South African transport.

I agree with Sacana “scrap labour…” Unfortunately this will never happen. Politicians are only interested in votes and ANC can never afford to loose the Unions votes. Most of politicians have no hope in hell to earn somewhere else the income. They are dependant on votes and to hell with the country. They haven’t got the brains to run a bussiness operation – if they had there would not have been labour laws and we would have had a growing economy with much much lower unemployment with hand on hand less crime.When a person is hungry he can even murder for food.Finance should be in control and people with more than a certain minimum income qualify to vote for people serving in finance.Existing Goverment should be cut by 75%. When will the first SAA plane crash due to bad service?

Inge,

You fail to mention to our honourable minister of finance that in most cases when CEO’s fail to manage companies properly, i.e. ethically and profitably they get fired and in most countries in the world they go to jail if they had their fingers in the till! SA is an exception! SA inc’s CEO’s are never embarrassed by their wrong doings! Not once did I hear the honorable minister admit that it is 100% the ANC’s fault that we are in this mess! Time for a Bernie Madoff moment with regards to our government corrupt officials!

Dear Minister Tito,

What effectively your spineless budget did for the taxpayer is to encourage him to pack his bags, take his wife and kids, and find a new life in another country. The taxpayer is sick and tired of funding dead enterprises and paying for people who cannot or will not work. We are tired of living with the governments failed labour laws, and tired of pitiless and useless promises. Year in and year out – same old $h!t. Nobody has been brought to justice on the scale of the pilfering that has been going on – everywhere the ANC has control. There are reasons for that, and some of those reasons have seats in parliament.

You sound like a very nice guy. Just show some honesty and take your blindfold off.

Because all taxpayers and decision-makers are straight males, married with kids..

Due to your comment I take it you are not. Even friends of Dorothy are leaving South Africa if that makes you feel better. It was about the thread of the story not what happens between the sheets. 🙂

Whew Inge, why so scared? Surely this statement ““The National Government is not taking on Eskom’s debt. Eskom took on the debt. It must ultimately repay it.” is just simplistic rubbish (or is he opening the way for a PIC funded BEE or Chinese buyout)?

I would like an article predicting SA’s voyage ahead; out of the gloom or deeper in – down grading, bailout, devaluation, interest rates up, social unrest, default?, etc seem likely to me.

What say you?

Semantics. All bailouts are ultimately paid for by the taxpayer.

The open letter is really becoming tired as a rhetorical tool. Now wait for 10+ other open letters in the comments section.

And just remember that on top of the budget, NO ONE HAS BEEN CHARGED, NO ONE HAS APPEARED IN COURT AND NO ONE HAS BEEN JAILED. Also, all the stolen “wealth” now sits in Dubai, Panama, Switzerland, etc.

And people will continue to line up at the polls to cote in spite of the fact that it makes no difference who you vote for. NONE WHATSOEVER!
WAKE UP PEOPLE!

The elephant ….. no the mammoth in the room. The criminals still rule in one form or another.

There is no accountability for these crimes, no consequence management by the State. That’s why crime is so appealing in SA.

Interesting when one view the picture of minister Tito holding up the aloe plant, inside a plastic pot…with its CRACKED BOTTOM covered with ADHESIVE TAPE (and even no bother to remove the rest of the white sticker containing what was the product barcode).

….and that for THE WHOLE country to see.

This PATCHED-UP plastic pot surely MUST’VE BEEN chosen for SYMBOLIC value, right?

If so, yes, I can understand Govt is trying to illustrate that the “pot is broken and patched”, but we will plant a new seed, signifying new hope/direction”

If not, then it highlights how unprofessional we became (as someone low-ranking was probably tasked 30min before proceedings started, to quickly find the nearest potplant outside Parliament building & bring it in…or to quickly drive to Auntie Kay’s nursery around the corner…)

Bottomline is there is a deficit of R243bn (half of Eskoms total debt), debt service cost of R209 bn, economic growth of 0.7%, population growth of 2.2% (South Africans). R23 bn per year in additional expedinture to Eskom and save 27 bn in COE over three years. IS Eskom saved? Will the economy grow?

“Fiscal support would be dependent on the appointment of an independent chief reorganisation officer (CRO) within SOEs.” So he replaces incompetent CEO’s with? Incompetent CRO’s? And where will he find these superheroes? Disney? Marvel Comics?

And yet another “summit be held to debate the future of SOEs.” Sigh ….

When will we get a politician who is actually knowledgeable, capable, experienced in finance and business, not tied to his/her old friends and political colleagues and who will stand up and perform for the good of South Africa Inc as a whole?

Those that have the attributes you wish for are in the private business sector.

Let us give credit to where its due, Nelso mandela did his best for SA thabo mbeki id his best for sa, zuma took us down the drain cyril ramaphosa is moving in the right direction despite the antagonist within and without

At the beginning of last year the Board of Eskom indicated that there is no money for salary increases, which was the right thing to do given the huge salaries that Eskom employees were already earning. The unions threatened with industrial action if their salary demands were not met. In response Eskom granted salary/wage increases above the then inflation rate. No salary/wage increases and bonus payments should have been made to send a clear message to all concerned that Eskom simply cannot afford it. Those who wanted to leave or strike could do so. No work, no pay, no jobs! Wonder what will happen this (election) year? Its high time that the salaries of Eskom employees should be freezed and that no bonus pay-outs should be made until such time that the staff complement and salary/wage are reduced to acceptable and affordable levels. In the private sector, no company can apply for a state bailout (handout) and will surely go out of business if it cannot manage its resources and operating expenses.

Load All 33 Comments
End of comments.

LATEST CURRENCIES  

USD / ZAR
GBP / ZAR
EUR / ZAR

Podcasts

SHOP NEWSLETTERS TRENDING CPD HUB

Follow us:

Search Articles:Advanced Search
Click a Company:
server: 172.17.0.2